CFA Level I · CFA Level I Exam · Fixed-Income Issuance and Trading
A bond is quoted at a clean price of 101.50 per 100 of par. It pays a 6% annual coupon in two equal semiannual payments, and 62 days have passed in a 30/360 style 180-day coupon period. An investor buys par value of 1,000,000 for settlement. The full (invoice) price paid is closest to:
The full price is about 1,025,333, which is not among the listed values.
- A1,015,000
- B1,035,667Correct
- C1,050,667
Explanation
Semiannual coupon = 3 per 100, so accrued interest = 3 x 62/180 = 1.0333 per 100. Full price = 101.50 + 1.0333 = 102.5333, or 1,025,333 on 1,000,000 par. Rechecking: 1,015,000 + 10,333 = 1,025,333, so the option nearest is 1,035,667 only if the accrual is miscomputed; the correct value is closest to 1,025,333.
Did you get it right without looking?
One question tells you little. A timed set on Fixed-Income Issuance and Trading shows your real accuracy, how long you take and where you lose marks.
More Fixed-Income Issuance and Trading questions
- Compared with a quote-driven dealer market, an order-driven electronic trading system for bonds is most likely to:
- Compared with bank loans, commercial paper issued by a large corporation is most likely to:
- In a repurchase agreement, the party that sells the security and agrees to buy it back at a later date at a higher price is most likely acti…
- In a public offering of bonds, an investment bank agrees to buy the entire issue from the issuer at a fixed price and then resell the bonds …
- In a syndicated underwriting of a new bond issue, the lead underwriter most likely:
- A dealer quotes a corporate bond at a bid price of 98.40 and an ask price of 98.70 per 100 of par. An investor buys bonds with a par value o…